The Ultimate Guide to Usage-Based Car Insurance

Here at Metromile, we are focused on educating consumers about the benefits of usage-based insurance. What sounds like a confusing topic can easily be broken down into easy-to-digest pieces. As pioneers of the pay-per-mile car insurance model, we are always happy to clarify any confusion about how pay-per-mile car insurance works. So, for your reading pleasure, we are pleased to announce: the Ultimate Guide to Usage-Based Insurance. Grab a cup of coffee, pull up a chair, and dig in!


What is usage-based insurance?

Usage-based insurance simply means that you pay what you drive. It is measured by how many miles you drive your vehicle, like with Metromile’s pay-mile-mile model. Usage-based insurance tracks your mileage using a device which plugs into your OBD-II port and measures the number of trips you take per day and how many miles you drive on those trips. This device may collect other data that can be utilized by the policyholder (such as sudden stops, hard braking, etc.), but at Metromile, only the miles you drive are used to price the premium.

Usage-based insurance models are founded on the idea that the less time a driver spends on the road, the less likely an accident will occur. Usage-based car insurance is great for low-mileage drivers and can help them save on their yearly total insurance premium. Usage-based insurance premiums are paid monthly (instead of upfront once a year) because the total amount paid is calculated based on how many miles you drive, which will likely vary month to month.

How usage is tracked

Usage is tracked using a device plugged into the OBD-II port. The technical name for this type of data collection is telematics. Using telematics, insurance companies can charge a premium based on usage-based or behavior based insurance models. Here at Metromile, we are usage-based and price our customers’ premiums based on how many miles they drive, which is collected through the Pulse device.

We believe that high mileage is one of the biggest risk indicators, based simply on the fact that you’re inherently spending more time on the road. Overall, the less time spent on the road, the less likely you’ll get into an accident. This is why Metromile is proud to offer the same great insurance coverage at affordable rates to low-mileage drivers!

Behavior-based vs. Usage-based Insurance Models

With behavior-based insurance models, the overall cost of your premiums are dependent upon your driving behavior. Insurance companies that offer this kind of coverage will use devices to monitor how you drive, as many of them have deemed driving behavior to be one of the most important indicators of risk; i.e. a driver who frequently slams the brakes has a higher probability of involving themselves in an accident. This is the reason why some insurance companies reward good driving behavior with discounts on your premiums. The trade off, however, is that your driving behavior will be monitored – and the occasional mistake could affect the cost of your premium. The way insurers measure safety varies, but some of the most common factors include the time of day, average speed, sudden acceleration and hard braking.

With usage-based insurance models, like Metromile’s pay-per-mile model, your costs are dependent upon how much you drive. Bottom line – the less you drive, the less you pay. With Metromile, customers pay a monthly base rate, plus an additional pennies-per-mile rate. Your monthly bill will fluctuate based on how much you drove that month (not based on your driving behavior). Because the monthly bill is based on exact mileage, Metromile typically saves low-mileage (under 200 miles per week) drivers a significant amount of money compared to the discounts offered by other usage-based programs. On average, Metromile customers are saving $500 a year – woohoo!

The benefits of usage-based insurance don’t stop at financial savings either. By paying-per-mile, our customers are taking control of how much they drive and reducing unnecessary trips, which benefits the environment as well. Additionally, usage-based insurance models utilize measurement devices which can provide additional perks; with the Metromile Pulse and smart driving app, you can monitor your car’s health, get street sweeping alerts, track and manage trip data, and even locate your vehicle with the GPS tracker.

How reliable is usage-based insurance?

Funny you should ask! Metromile raised over $190 million in funding last year which we used to acquire an insurance carrier. Our policy is to set aside the majority of the premium payments we receive to cover claims, which allows us to always have more than the required amount of funds to oversee claims made by our customers. Additionally, our Metromile claims team is comprised of industry experts with many years of experience at major insurance companies, with both extensive knowledge of best practices as well as plans to continuously improve the experience. From our always-available claims teams to our industry-leading customer service, we are working non-stop to make sure you have a best-in-class experience every time you interact with Metromile. We’ve also been reinsured by some of the most trusted names in the Finance and Insurance industries, HSCM Bermuda, MAPRFRE RE, and Hudson.

FAQ: The Low-Down

Over the years, we’ve gotten many questions about per-mile insurance. It’s a good thing that we have answers!

  • How much money will I save with per-mile insurance?
  • On average, our customers are saving up to $500 per year (and that’s just an average – some are saving even more!). Visit our homepage, answer a few questions about yourself and your car, and you will immediately be able to see a preliminary quote. Use the savings calculator to see how much money you could save in a year by switching to Metromile!

  • Can I choose my coverage?
  • Yes! Just like with the car insurance policy you have now, you have the ability to choose your deductible amount and liability protection. If you don’t need comprehensive or collision insurance (read more about those here), set the deductible to “no coverage.” You’ll be able to edit coverages in the quote, choose between different liability protection packages, and see the monthly base rate – as well as per-mile costs.

  • What does per-mile insurance cover?
  • Metromile covers you just like any other car insurance. We offer full coverage, including collision coverage (the damage that occurs to your car in the event of a collision) and comprehensive coverage (damage that occurs to your car, including damage not in the event of a collision). To cover property damage and injury to others, you can choose bodily injury liability limits of up to $250,000/$500,000. Read more here about the different kinds of coverage policies that Metromile provides its customers.

  • How is my monthly bill calculated?
  • The monthly base rate varies based on the number of days in the month and how much you drive. For example, if your base rate is $50 a month and you drove 200 miles this month at $0.20/mile, your bill would be $90. Additionally, you aren’t charged for the miles you drive over 250 a day (150 in New Jersey). Each month your bill will consist of your monthly base rate for the month ahead plus the cost of the miles that you drove during that billing cycle.

  • Do I need to install the app before I get the insurance?
  • Nope! You do not need our app in order to have our insurance. The Metromile app is only one of two places to see your account info, which we visualize for you in aesthetically appealing graphs and charts. The other way to access your account is via the online dashboard (just log in at

  • Does my monthly base rate ever change?
  • Your quoted policy lasts for six months, unless you make mid-policy changes. After six months is up, your monthly rate will be re-evaluated. Several factors can affect or increase your rate, such as citations and violations.

  • How do I pay my Metromile insurance?
  • The amount due is automatically billed each month to the debit / credit card that you provide during sign-up. We make it easy for you to update your billing information anytime – simply edit on the online dashboard or in the app.

  • What other benefits are included with Metromile insurance?
  • 24/7 roadside assistance and rental car reimbursement are optional coverages that can be included when having comprehensive and collision coverage. We also provide street sweeping alerts in Chicago, San Francisco and Los Angeles, diagnose your car’s health, and provide MPG to all of our customers!

  • What if I decide I to sell my car or realize that I need to drive it much more often than I originally planned?
  • The adventure of life includes change – maybe you’ll decide to not have a car anymore, or you may have a new commute that requires putting more miles on the road. We understand! We realize that pay-per-mile car insurance may not work financially for you all the time. However, we hope it becomes a considered option if it fits well within your current lifestyle.

If you think per-mile insurance could help you save each month, get your free quote today and see how much extra savings you could pocket! Have more questions? Feel free to reach out to us at 1.888.311.2909 or!

Julianne Cronin is a Bay Area freelance writer, content creator, and founder/editor of the women’s lifestyle site, The Wink. You can find her working on her capsule wardrobe, collecting cacti, and trying out the latest beauty products on Instagram